RBA says its pandemic cheap lending policy to business failed (sort of)<p>The Reserve Bank of Australia has published a research paper on its cheap lending facility introduced as part of its Covid policy response. It concludes that the facility failed to boost borrowing by businesses.</p><ul><li>Reserve Bank of Australia's Term Funding Facility (TFF)</li><li>It achieved a key objective of providing banks with three-year low-cost funding and was available for drawdown until 30 June 2021.</li><li>we find no statistically significant evidence that the TFF increased credit supply to businesses</li></ul><p>The report then hedges:</p><ul><li>However, our confidence intervals are wide and there are significant identification challenges involved in disentangling the effects of the TFF from the effects of pandemic-related disruptions and other policy interventions on credit supply and demand. Nonetheless, the TFF provided an assured source of funding at a time of considerable stress in the financial system and lowered banks' funding costs, and any effects on business lending via these channels may not be fully reflected in our results.</li></ul><p><a href="https://www.rba.gov.au/publications/rdp/2022/2022-07.html" target="_blank" rel="nofollow">Link is here</a> for the full thing. </p><p>---</p><p>Cheap funding for banks did help send house prices (even further) to the sky though ... </p>
This article was written by Eamonn Sheridan at www.forexlive.com.
Source: RBA says its pandemic cheap lending policy to business failed (sort of) (https://www.forexlive.com/centralbank/rba-says-its-pandemic-cheap-lending-policy-to-business-failed-sort-of-20221213/https://www.forexlive.com/centralbank/rba-says-its-pandemic-cheap-lending-policy-to-business-failed-sort-of-20221213/)
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